Financial Performance - Net earnings attributable to Biglari Holdings Inc. shareholders for Q3 2024 were $32,125, compared to a loss of $56,514 in Q3 2023, marking a significant recovery [100]. - Net sales for Q3 2024 were $39,660, an increase of $465 or 1.2% compared to Q3 2023, driven by a 5.4% increase in same-store sales at Steak n Shake [107]. - Total revenue for Q3 2024 was $62,384, up from $61,886 in Q3 2023, reflecting growth in both company-operated and franchise operations [106]. - Investment partnership gains for Q3 2024 were $26,447, a significant recovery from a loss of $68,377 in Q3 2023, contributing positively to overall earnings [100]. - Net sales for the third quarter of 2024 were $82,553, up from $81,780 in 2023, while net sales for the first nine months of 2024 reached $246,811 compared to $242,741 in 2023 [118]. Cost and Expenses - Franchise partner fees decreased to $17,157 in Q3 2024 from $17,622 in Q3 2023, attributed to higher food and labor expenses for franchise partners [109]. - The cost of food at company-operated units was $12,218 or 30.8% of net sales in Q3 2024, compared to $11,888 or 30.3% in Q3 2023, indicating a slight increase in food costs [111]. - Labor costs at company-operated restaurants rose to $13,158 or 33.2% of net sales in Q3 2024, up from $12,192 or 31.1% in Q3 2023, primarily due to an increase in store-level management [112]. - General and administrative expenses for Q3 2024 were $10,355 or 16.6% of total revenue, down from $10,720 or 17.3% in Q3 2023, reflecting improved cost management [113]. - Cost of food as a percentage of net sales increased to 30.4% in Q3 2024 from 28.8% in Q3 2023, while labor costs rose to 27.2% from 26.6% [118]. Operational Metrics - The company operated 468 restaurants as of September 30, 2024, a decrease from 492 restaurants at the end of 2023, due to closures and transitions to franchise operations [102]. - The company recorded no impairment charges in Q3 2024, compared to $752 in Q3 2023, indicating improved performance of its assets [114]. Insurance Operations - Underwriting gain for First Guard in Q3 2024 was $1,366, down from $2,362 in Q3 2023, with a net underwriting gain of $1,800 compared to $1,735 in the same period [120]. - Premiums written by Southern Pioneer increased by $1,817 (9.0%) in 2024 compared to 2023, with a loss ratio of 47.9% in Q3 2024 versus 60.5% in Q3 2023 [126]. - Total other income for the insurance operations was $845 in Q3 2024, down from $1,155 in Q3 2023 [123]. - Net investment income for the insurance operations was $645 in Q3 2024, compared to $658 in Q3 2023 [128]. - Pre-tax underwriting gain for the first nine months of 2024 was $3,683, down from $6,651 in the same period of 2023 [123]. Cash Flow and Investments - Total cash and investments as of September 30, 2024, amounted to $624,382 million, an increase from $592,717 million at the end of 2023 [147]. - Net cash provided by operating activities for the first nine months of 2024 was $31,665 million, down 34.9% from $48,676 million in the same period of 2023 [149]. - Cash used in investing activities decreased by $21,310 million in 2024 compared to 2023, primarily due to a decrease in investments [150]. Debt and Credit - Interest expense on notes payable for Q3 2024 was $275 million, a slight increase from $262 million in Q3 2023 [144]. - Biglari Holdings' line of credit was increased to $35 million as of September 13, 2024, maturing on September 13, 2026 [151]. - The balance of the line of credit was $9 million on September 30, 2024, with no balance on December 31, 2023 [151]. - The interest rates on the line of credit were 7.71% and 8.06% as of September 30, 2024, and December 31, 2023, respectively [151]. - Western Sizzlin had an available line of credit of $500,000 with no debt outstanding as of September 30, 2024, and December 31, 2023 [152]. Accounting and Controls - There have been no material changes to critical accounting policies since the annual report for the year ended December 31, 2023 [153]. - No recently issued accounting pronouncements were applicable for the Quarterly Report on Form 10-Q [154]. - Disclosure controls and procedures were deemed effective as of September 30, 2024 [158]. - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended September 30, 2024 [159]. - There have been no material changes in risk factors since the previous annual report for the year ended December 31, 2023 [160]. Oil and Gas Operations - Oil and gas revenues for Q3 2024 were $9,574 million, down 21.1% from $12,159 million in Q3 2023 [131]. - Oil and gas production costs increased to $4,425 million in Q3 2024 from $3,771 million in Q3 2023, representing a 17.3% rise [131]. - Contribution to net earnings for Q3 2024 was $599 million, a significant decrease of 95.9% compared to $14,631 million in Q3 2023 [131]. - Abraxas Petroleum recorded a gain of $16,700 million from selling undeveloped reserves during the first nine months of 2024 [132]. - Investment gains net of tax for Q3 2024 were $3,706 million, compared to losses of $3,710 million in Q3 2023 [138].
Biglari (BH_A) - 2024 Q3 - Quarterly Report